MAC Copper Limited (MTAL) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the MAC Copper Limited Q1 Results Call and Webcast. [Operator Instructions] I would now like to hand the conference over to Mr. Michael McMullen, CEO. Please go ahead.

Thank you very much, and thanks, everyone, for joining us on what is a busy reporting schedule given the shortened holiday period in Australia. I'm Michael McMullen, the CEO. I'll run through the presentation. I'm joined by our CFO, Morne Engelbrecht, who will talk about some of the slides on the financials. This deck has been released on the ISX along with our quarterly report this morning. And as usual, we've got the disclaimer and everything at the front that you can all read at your leisure. So, look, MAC Copper at a glance, we got an enterprise value of around USD 940 million. We're sort of planning to get over 50,000 tonnes of copper in the not-too-distant future on an annual basis. Very strong balance sheet. Obviously, we've announced the refinancing of the debt that we did during the quarter. Morne will run through that. And just so everyone is clear, to make sure the market understands how many shares we're going to issue, 82.5 million shares in issue, about 3.18 million warrants at a strike of USD 12.50 a share. The gearing is under 20%, which is within our range of where we target. And we've got 2 key growth projects underway, the ventilation work, which we'll talk about in later slides. Then the really exciting news actually is the Merrin mine that we started rolling out in the marketplace during the last quarter, and we've made some really good progress on that. And so we've got quite a few slides on that, as we are quite excited about that thing. So, going forward, the first quarter is always our softest quarter. If you recall, the fourth quarter last year was a very strong quarter. And then obviously, we have to come through the January period where we pushed very hard in the back 6 weeks of last year. And we typically see a little bit of seasonal variation in weather as well, with summer storms. It really is a function of where we are in the stope sequence. We can see the stope sequence we have ahead of us right now. We've got a lot of large tonnage, very high-grade stopes that have been coming online over the last few weeks. Therefore, we're not changing our guidance based on what we can see coming out of the ground ahead of us. C1 was still pretty decent at USD 1.91 a pound, total cash cost of about $2.47 a pound, and a realized price of USD 4.04 a pound for the quarter. If you read that little footnote there, we've had some questions from people about the impact of the hedges on the received price. And so we are now showing the received price net of hedges. I'll let Morne really go through all the balance sheet and the financials, and liquidity. But for this year, 43,000 to 48,000 tonnes of copper is where the guidance sits. Copper grade is somewhere between 3.8% and 4%. And obviously, we had a very strong grade profile during Q1 and growth CapEx of somewhere in the order of USD 20 million to USD 25 million and sustaining of USD 40 million to USD 50 million. Overall, we have seen some good tailwinds coming into this year from both the exchange rate and TCRCs. Actually, for those of you who follow the market, we've seen actually spot copper treatment charges at negative $40 a tonne, which should indicate a pretty good annual benchmark settlement for next year, possibly even lower than where we currently sit. So that's been quite a good positive thing, which I guess has obviously helped our C1 despite the lower volume during the quarter. Safety, we like to talk about. I would say I've said on calls in the past that our TRIFR has been okay, but probably a little sticky, I suppose. But now we're starting to see the benefit of all the hard work that the team at the site has done, with the TRIFR starting to trend down quite nicely. And I think by the end of April, we'll end up at around a TRIFR of around 7 actually, for the last 12 months. So that's great. One of our big sustaining capital projects that we're doing is our tailings storage facility, so the Stage 10 embankment. That's on track for completion in the fourth quarter of this year. Again, just for the Australians, we're an annual financial year, so in the December quarter. And that will provide us with capacity out until about 2030. And so we are actually building all of that now. So we're well on track. We've had no reportable environmental incidents during the quarter. So from an ESG point of view, actually, we've had a pretty good improvement on where we had been tracking before. Production. Look, obviously, we saw production trend down. As I said, it was a combination of pushing very hard during the fourth quarter. You can see there that the December quarter numbers were very strong. And probably 1.5 days of production lost in February due to some summer storms, which, again, if you think back to last year, was exactly what we had that period. The grade was good. So head grade of a bit over 4% copper. We expect to see the Q2 grade to be as strong, if not a bit stronger. And again, really, the increase in C1 was driven by volume. We've always sort of said that fixed costs are sort of circa 70% of our volume, but we did have a bit of a win on the TCRCs. In the word version of the quarterly that we put out, if you look at our production and cost in the month of March, obviously, as we did a lot of catch-up work in January after the very strong December quarter, if you look at the month of March, we produced just under 4,000 tonnes of copper and our C1 was around about USD 1.45 a pound. So that gives you an indication of where we think the business should be and can be. And again, it's really making sure that we have, as a minimum, 2 or 3 months really strong in a quarter. Actually, this Merrin mine has the ability to smooth out some of those ups and downs in the production cycle. So overall, it was an okay quarter. We do expect always the March quarter to be our softest quarter, and that pattern has been maintained. Lots going on, on this slide here. I guess we've again had some questions from people around total CapEx and what's in growth and exploration, and sustaining. And Morne has done a great job on the graph on the left, they're trying to outline what we've spent the money on. You will note that sustaining CapEx has dropped down a fair bit, actually. We had a very strong spend on the Stage 10 capital expenditure during the December quarter. And so we're ahead of the game there. Also, some of the timing of rebuilds has basically resulted in us needing to spend less capital. You can see there the growth CapEx was pretty constant, around about that $4 million, and what's in the growth CapEx. So we don't put tailings dams into growth. That's in sustaining, but we do put our Merrin mine expenditure and the capital Vent project sits in there, and we spent about just over $1 million on exploration. Development meters. So again, we're starting to give a little bit more detail for people here as to where the development meters are going or coming from. And you can see here that, that blue bar on the graph on the right is the Capital Vent project, which we've spoken about as being very important for the future of the mine. You can see we're starting to ramp up the development meters there. Again, for those of you who followed us for a while, as we turn off from the existing workings and head out to these things, the development rates are quite slow because we're interacting with the existing mine, and that's Merrin mine, and the Capital Vent project have both been the same. But as we get a bit further out, we can start not interacting with the mine, and we can really start ramping up those meters. And so that's really what you're seeing in that graph on the right. In addition to that, we did an extra 227 meters of capital development up in the Merrin mine. So if you think about total development for the business, we are actually starting to ramp up capital development quite a bit here. You will see why in the Merrin mine, that's actually where we've been able to do a lot of development meters with not a lot of equipment, and for a pretty cheap cost. So look, our goals are still the same. It's really been consistent, safe, low-cost copper production. We do want to advance that ventilation project. We want to get the Merrin Mine online and obviously, the balance sheet. So this bridge gives you a bit of an idea of where we see the production coming from. So for next year, 2026, the midpoint of guidance is around 50,000 tonnes of copper. We see the Merrin Mine being additive to that, and we're getting quite excited about the Merrin Mine, as you're going to see in the next few slides here. So, targeting production from the fourth quarter, which is the December quarter this year. This is everything from the surface down to about 900 meters below the surface. It's the Merrin Mine. It's got a whole bunch of different deposits in there, but just making life easy, we just call it that. Not all of that is in JORC or SK 1300 resources, but we have sufficient confidence in those mineralized estimates to make investment decisions. And really, that revolves around the age of some of the assay data and assay certificates, with the resource and reserve QPs and the mine planning teams have done a herculean effort here to digitize a lot of old data and to go and do check drilling and confirmation work, which has taken quite some time. This is data that's gone back over 40 years, 50 years. But actually, we found a significant amount of mineralization that was sitting in there. Most of it sitting very close to existing development. I try and break it down into the simplest form by saying there's really 4 separate components to this mine. There's a quite high-grade, narrow 3, 4 meters wide at 10% to 20% copper in that QTSS South A, which is that little blob sitting right up on the top left of that page of that image. That's what we're driving out to now. Then there's a reasonably high-grade sort of 8% to 10% zinc with a little bit of lead and a high-grade zinc zone, which our plan is to mine that and truck that up to Polymetals to the Endeavour mill for treatment. We then have what we call a medium-grade copper ore body, which actually, in terms of tonnage, is the largest part, quite substantial, around about 2.5% copper. And then last is the mix, which is a mixed copper-zinc material, which actually is starting to become reasonably sizable as well. The beauty of this thing is that it is completely separate from the rest of the mine. We access it through the decline. It's 150 to 200 meters below the surface. It's fantastic ground. The team that's up there is running as a separate operation and is doing development at a much faster rate than we currently can do at the bottom of the mine. We really have no great constraints apart from equipment and people. We've been spending a lot of time at the site with the corporate team over the last 6 weeks, actually adding resources to this. We've doubled the number of jumbos that are going in there and increased the number of trucks, increasing the people because, quite frankly, this is a lever we can pull very cheaply. Our cost per meter to develop is roughly 1/3 of what it is at the bottom of the mine. And as we've said often, the more you look, the more you find at CSA, and I'll run through some of the things that we found. So again, we're on track for some production for copper out of this during the fourth quarter. And we're actually quite excited about this. So the view on the left is a surface plan. All that light gray-looking stuff is the surface projection of the existing underground workings. QTSS South Upper is heading off to the left side of the page. Pink Panther is another deposit we've been drilling out from the surface, and that is the surface expression of the Merrin Mine. As we have developed the drive out towards QTSS South Upper, we have discovered quite a bit of massive sulfide, both copper, and you can see in that actually, that's the tagboard cutting for independent firing there, but that's about 2.5 meters of high-grade massive sulfide for copper, which was not in any of the models at all. We've also developed through some quite high-grade zinc and lead mineralization as well on the way out there. So we think there are a lot of opportunities to expand this. And as I've said, there's no real constraints in terms of going faster or doing more, apart from people and equipment. So we now have independent ventilation that's been established there. So again, as you start developing out from the existing drives, it's slow, you're interacting with the rest of the mine. The team has managed to tap into an existing vent shaft out there that's not connected to the bottom of the mine. And during the month of April, we've established independent ventilation and therefore, independent firing, and now we can really ramp up development rates. Having said that, one jumbo up here has been getting about the same amount of meters more or less as 3 jumbos at the bottom of the mine, and consequently, very cheap on a unit rate basis. So we're pretty excited about this area. You can see here, this is the drive going out to QTSS South Upper. And again, the more you look, the more you find. We actually drilled that vertical hole on the right is a geotech hole for where the vent rise was going, and it hit the typical 3 to 4 meters at 10% to 20% copper mineralization. So all of a sudden, we decided to go and drill some more holes up there. And guess what, we've extended that ore body vertically about 70 meters now. So we knew enough to make the investment decision to go out there, but we knew everything was still open. As we go out there, we're finding more and more stuff. So we're pretty happy with the way that's all going. It really will be a separate mine from the rest of the mine. So again, the existing mine is being accessed to the ore comes out through the haulage shaft. This is coming out through the decline. It's about a 6-minute drive from the ore body to the ROM pad and very low unit rates relative to what it currently costs us to mine, and quite good grade as well, actually. And so we've been asked, well, how big could this thing be? Not all of it's in reserve, very little of it's in reserve, in fact, not all of it is actually in JORC or SK 1300 resource. I think it's pretty topical right now, but this would be a woodlawnsized mine, but mostly copper with a bit of zinc as opposed to the other way. That's probably the most analogous thing I can give to people right now, just for the Merrin Mine, is that this would be around about a woodlawnsized operation. So you can tell why we're quite excited about it and why we're throwing more resources at it as quickly as we can. Ventilation project. So again, chugging along, you could see from that graph earlier that the development meters are really starting to ramp up in that thing, still on track for Q3, the September quarter next year, after completion. This is really important for unlocking the bottom of the mine, allowing us really for the bottom of the mine to get additional vent. And so in the immediate term, we're developing this Merrin Mine, which will have a reasonably long life. But also, we haven't taken our eye off the ball for this thing because this is actually really important for unlocking the bottom of the mine. With that, I'm going to hand over to Morne, and he can talk to people about the financial side of things.

All right. Thanks, Mick. Good evening, morning, everybody. Going to Slide 15 now. We announced during March 2025, the very exciting news that we completed the refinance, as Mick said, of our debt structure with the recut of the senior debt facilities, including the early repayment of the Mezzanine facility. Overall, we have significantly delevered and simplified our balance sheet over the last year, reducing our net gearing by more than 50% to just under 20%, as Mick said, at the end of March 2025. Just to recap what has changed with the refinance. So, as you would remember, we had the old facilities, which were made up of the USD 159 million term loan facility. There was a $25 million revolving credit facility, $145 million Mezzanine debt facility, and then an AUD 45 million environmental bond that was provided by Glencore. The new facilities are made up of $159 million term loan facility, $125 million revolving credit facility, and a AUD 45 million environmental bond now provided by 3 new Australian banks. Some of the key highlights of the refinance. We've now fully repaid the mezzanine debt facility. So that's the $160 million that we repaid on that facility, which included the 4% premium and the interest to June. We did extend the maturity of the old facilities as well, so both the term and the revolving facilities to March 2028. We increased the revolving credit facility by USD 100 million to USD 125 million, providing even greater flexibility on available liquidity. The refinance provides for a repayment holiday to 30 September '25. And then also, we've got a new repayment profile which reduces our repayments by $123 million by December '26, when comparing the old versus the new repayment profile. Importantly, we also reduced the average weighted cost of debt by more than 30%. So that's sitting at the end of March is around that 6.84% on the senior debt we've got outstanding at the moment. That saving equates to about USD 14 million per annum in cash interest savings. And then finally, on the continuous copper payments to Glencore, we have maintained a contractual position that the contingent payments will not be payable before June '26. Even if triggered other than from free cash flow after satisfaction of all of our operating costs, royalty, debt repayments and stream servicing costs. So overall, we are extremely pleased with the refinance position of the balance sheet and obviously very thankful for the great support that's been provided by our lenders in that regard. Moving to Slide 16 and the all-important cash flow waterfall. Just to go through a few key elements there. So firstly, again, we had a very healthy free cash flow from operations there after sustaining CapEx of around $30 million for the quarter. Secondly, we paid that, as I said, the $160 million to extinguish the mezzanine debt facility, which included that 4% premium and then also the interest paid of around $9 million from 1 January to 16 June '25, which is included in that $160 million. You will note the interest there that we have from the senior facility of $3 million. And as I said before, with the repayment of that net debt, we're now saving around USD 14 million per annum on interest on that. We also sold some concentrate at the port of just over 1,500 tonnes at the end of March. So that was just to align the production and sales from a cash point of view, albeit we couldn't recognize it as revenue because it wasn't loaded on the ship by the end of March, but that happened in early April. So in summary, our senior facility is now sitting at $159 million. We drew down on about $66 million on the revolving facility, and then we had USD 75 million of cash in the bank at the end of March as well. So that gives us that net debt figure of USD 150 million. All in all, we also had a very healthy liquidity of $153 million, so almost AUD 245 million liquidity available to us at the end of March, and that consisted of that undrawn revolving facility of $60 million. We also had outstanding QP receipts of $8 million, unsold concentrate of about $8.2 million, and that investment in Polymetals, which has done really well for us at around USD 3 million as well, contributed to that liquidity. So overall, very strong and healthy balance sheet position, and with the completion of the refinance and obviously, the repayment of the mezzanine debt facility there, which will drive some significant cash interest savings for us going forward. Going to Slide 17. This slide we've shown before, just showing our targets around production, cash cost, and gearing. Mick has already covered off on how we are targeting significant growth through the execution of those 2 key projects in terms of the Merrin mine and the ventilation capital project, which will deliver at the end of this year and then Q3 next year, respectively, and that will drive that targeted annual copper production above 50,000 tonnes. On the cost side of things, again, we've been chipping away at the cash cost there, and C1 has reduced significantly, around 30% to $1.91 from the March quarter compared to June '23. And then, as Mick has mentioned as well, the C1 in March, with the production that roughly 4,000 tonnes in March dropped to about USD 1.49 per pound. So that's very pleasing to see and already demonstrates that we're getting to that target of $1.50 that we have for 2025. Then with the refinance, as we've walked through, that's reduced significantly from where we started out, and that's within our target range of just below 20%. So very pleasing and pleasing to see that all those metrics are going the right way, and pleasing to see the progress there. And over back to you, Mick.

Sure. Thanks for that. So, look, I think in summary, we're executing on the plan, the base plan, maintaining guidance. We expect to have a pretty strong second quarter based on the production profile we have ahead of us. Our investment in Polymetals has done really well. They look to be progressing well towards ramp-up. I guess we actually have some high-grade zinc material in the Merrin mine that we could mine quite quickly. We're just waiting to see how they ramp up. But again, we would like to think that by the fourth quarter of this year, we will be shipping them some zinc mineralization for treatment. We have signed the tolling agreement with Polymetals. But that's subsequent to the end of the quarter, I think on the first or 2nd of April, we invested another AUD 2.5 million into Polymetals at $0.35 and now trading at 90-ish. So that's been a good return for shareholders. And overall, as I said, we're liking Merrin mine more and more, the more we look at it, the easier with which we can get stuff done. Now, mining is never easy. But on a relative basis, it is quite easy up there. It's very shallow, fantastic ground, really quick to develop stuff. And we are finding more and more material up there that can go through either our plant or the Polymetals plant. Again, it is a woodlawn-sized mine, but predominantly copper. And we'll try and, as we're moving drill rigs out of the bottom of the mine, that will give us more ventilation down there for production. We've got a 12-year reserve life at the bottom of the mine anyway, but we want to pull those rigs up and put them up in the top part of the mine in that Merrin mine so that we can start drilling that material out and getting it into reserves so that we can actually start talking about it in a bit more of SK 1300 type manner. So overall, look, I think our employees have done a pretty good job. We obviously had a really strong December quarter. And then we had a bit of catch-up work that we had to do during January and into February. But it is pleasing to see that turnover has stabilized. We've seen, I think, March is probably, if not the lowest, certainly one of the lowest turnover months we've had since we've owned the mine. Again, the safety has improved quite markedly. So with that, I'm going to hand it over for questions, and happy to take questions from anyone who would like to ask some.

[Operator Instructions] Your first question comes from Daniel Morgan from Barrenjoey.

Probably the first question just for Morne. Can I just confirm that from a cash flow perspective, your production and sales are aligned? So I note that you sold officially 1,200 tonnes less copper than was produced in the quarter, but you also got the $22 million payment from Glencore. Is my interpretation correct that, basically, from a cash perspective, your production equals sales?

Yes. I mean, that's typically how we try to run it on a quarterly basis. It's difficult to make all the shipments work out exactly in terms of the quarterly reporting. So in terms of the sales versus production, so if you look at what we presold, just over 1,500 tonnes, if you add that to the sales volume, you get to the production volume. So that's what I try to do on a quarterly basis, is to try and match the cash with the production, just to have that consistency in terms of every quarter matching up. So that's the aim. We can't recognize it as sales. I can't add it to the sales figure or the sales revenue, and I can't add it to the free cash flow from operations. But until it's loaded onto the ship, I can add the cash to it. So we do that just to smooth out and make sure that we report to the market, I suppose, cash that reflects the production because obviously, we've sucked the cost into that production already. So that's the aim really.

Mick, maybe going to Merrin. I think you indicate expectations of first ore at the end of 2025, Q4-ish. Will you get any development ore as you go? Is there any potential to pull a stope? Or is it barren? I guess you found stuff as you've been developing across.

Yes. Well, actually, that massive sulfide sitting in that cut right there. Look, the short answer is we'll be able to pull development ore out. We actually already have, I don't know, a dozen truckloads or half a dozen truckloads of fairly high-grade zinc lead mineralization sitting on the surface that we mine through as part of the development. So yes, look, we're obviously going to be opportunistic and take it as quickly as we can. Right now, Polymetals isn't running. So that stuff is sitting on the surface. But if we see copper mineralization that is worthwhile taking, we'll obviously get that and we'll put it through the plan.

And so I appreciate that the Merrin is still an evolving, seeing uncertainty and hard numbers, et cetera, are difficult to talk about at the moment. But what tonnage would you see as a success based on where you're sitting now for 2026, for example, I'm talking ore tonnage, and where would it come from? I mean, you identified a few different areas of mineralization, which have, I guess, different outcomes with grade and economics.

Yes. Actually, maybe that plan that's on that slide there would be good. So QTS South Upper, I think if we do somewhere, look, I'm hoping we can mine it a bit narrower than what the current plan is, but somewhere like 150,000 tonnes at 5%, 6% copper out of that. Maybe a little bit out of the Pink Panther as well. It's a lower grade. And then something like 150,000 tonnes at, call it, 9% zinc to truck up the road to Polymetals. And I would think what we call the medium-grade copper, that stuff that's about 2.5%. That's actually a bit more bulk tonnage. Just not quite sure how much of that will get out next year, but I don't know about 100,000, maybe 150,000 tonnes, that at 2.5, something like that.

And just to clarify, these numbers you're providing are these run rate numbers? Or is that what you would cumulatively succeed in for 2026?

Yes, run rate is higher than that, but we won't be because we're getting into it towards the end of this year, we won't be at full run rate on average for next year. But yes, that sort of number, I think we should be able to get out. Yes. But again, you can see why we're pretty excited about this because it has the potential to add meaningful production to us. And we've got estimates of what our mining costs will be, but we can look at what our cost per meter of development is, and it is 1/3 of what we're currently paying at the bottom of the mine. So 2.5%, our medium-grade stuff at only 2.5% copper, whilst not quite as exciting as 4% at the bottom of the mine, the cost per tonne for that is very low, and it's only got to cover your variable cost. Like it doesn't cost us any more overhead or through the plant or overhead through G&A, it's the same stuff, same cost. So we think we can make quite a lot of money. So the other advantage of this Merrin mine is, obviously, we've spoken about it at length. The CSA mine has these very high-grade stoping areas that, when you're in them, it's fantastic. When you're not in them, it's less fantastic. We can produce anywhere from 2,000 tonnes of copper in a month to 5,500 tonnes of copper in a month. And whilst we can see the stoping profile and we're comfortable from an annual basis, clearly, the market likes to see less volatility on a quarter-by-quarter basis. So, one, we think we can make a lot of money out of this Merrin mine. So that's a great idea, fantastic return for the capital deployed. But secondly, we think it has the ability to allow us to smooth that production profile out and derisk the operation because it's coming out of a different part of the mine, different means of getting out as well. So, to me, that's actually a big advantage of this thing is it allows me to engineer out that inherent volatility that the CSA mine, like the current CSA mine, has. So 2 advantages. I always like to make money out of things, but the second one is smoothing that volatility up is really important.

Sorry, Mick, to come back. Just on the fixed cost leverage in the business. Is it fair to say that the mine is about breakeven at maybe 35,000 tonnes per annum of copper production? And then after that, that's your margin. Is that a fair way of looking at it?

I think it will be a lower number than that. Morne will be able to work it out for you. But I have done the exercise a while back. I would think it's high 20s, 30%, probably the number.

Your next question comes from Ben Wood from Wilsons Advisory.

Positive to see that the strong volumes coming through in March led to those meaningful cost reductions, which we were baking into our forecast. My question is that the previous copper production guidance for calendar year '26 is sitting between 48 and 53 kilotonnes. But I noticed in this release that you referenced further down that there's a pathway to greater than 50 kilotonnes of copper equivalent production. And just wondering, should we interpret this as perhaps a more conservative outlook in '26 for copper, but perhaps signaling a greater emphasis on zinc? Or how should we interpret that word?

Well, no real change, to be honest with you. I think, yes, obviously, when we put that guidance out originally, we weren't planning on mining any zinc. Now we are planning on mining some zinc. We've obviously got the agreement in place with Polymetal. So we've got an outlet for it. I think with what we see in this Merrin mine, we're feeling pretty comfortable. There's upside risk in that forecast. But it's a bit of an evolving thing, this Merrin mine. Like, I think I'd rather get to the end of this year and then I can upgrade next year, if that makes sense.

Yes, no worries.

It developed mine by that stage, right, then I'll have a much better idea.

So just a second one as well, if I can. Previous estimates for the vent project sit at about $40 million. There's been $8 million spent on growth CapEx in the last 2 quarters, implying about $34 million, $35 million left for the vent project. Is that still on track?

Yes, although I think it's AUD 42 million versus USD, so yes, that's right.

Those numbers still hold?

Yes. Yes. Look, again, we may not have it in the deck. I think it's in the Word version of the quarterly. As we're doing more meters, you may have the exact number, but I think we saw a reduction in the cost per meter of development come down a bit as we did more meters.

That's down to about $11,000 a meter from 12.5?

Yes, yes. So look, the bigger components, obviously, are when you start, we've got to do a bit more development, some somewhat sizable vent fans have got to be bought. So, there from memory, don't hold me to it, but off the top of my head, there'd be $4 million or $5 million between those 2 there as like a one-off lump. And then there's a raise boring work, which is the other big component.

Your next question comes from David Radclyffe from Global Mining Research.

My question is just coming back to that profile again, and maybe just thinking about the shaft production for the year, because it looks like you've got an average sort of north of 3,000 tonnes per day ore hoisted. The mine hasn't done that for a while. So maybe you could talk to us just about the outlook for this year and give us some more color on how that profile looks. And maybe there is some more grade upside there that gives you confidence in hitting your targets?

Yes, that's right. So again, look, we've been very clear that when we bought the mine, let's dilution control and mining practices weren't best-in-class, I think, is probably the best way to put it. So the guidance for this year that we had for grade was, I think it's on the front slide there, but it was 3.8 to 4. And obviously, we're running at 4.1, 3.8 to 4. So we are seeing a little bit better grades. So I'd always rather haul less dirt for the same metal. So what's likely to happen is around about that 4%, maybe 4.1% for the year, and haul a little bit less dirt. That's probably where it looks like it's coming out.

[Operator Instructions] Your next question comes from Tim Hoff from Canaccord.

I was just wondering about the offtake terms that you've got for any zinc production that might have been produced through the tolling arrangement. Does that go through Glencore's current arrangement?

Not at this stage. So it is a tolling agreement, so as opposed to an ore sale. So we will get cone back to deal. We have not, at this stage, signed off-take. And I've spoken about the copper market, it's incredibly tight for copper cone. Actually, it's really tight for zinc corn as well. I must admit I haven't had a look for a few weeks, but zinc cone on spot will be, if not below 0, pretty close to 0. And our immediate focus has been to charge on out to get the high-grade copper out there. Quite frankly, there's high-grade zinc we could take in a very short space of time, even quicker than the copper. But we have to wait for polymetals to be up and running right, and let them get up and running and not try to force them, get them up and running. But we have a draft of the offtake. We will be signing something here in the not-too-distant future, I think.

Just to clarify that the copper is also separate from the CSA offtakes.

Sorry, which copper?

So any copper you might produce through polymetallic or...

Yes, that's right. Well, if we're sending copper ore up to polymetals, we won't recover the copper because their circuits are a zinc-lead circuit. So that's why we chose the zinc lead ore up there. Anything that's got copper in it that's going to run through our plant.

Your next question comes from Eric Winmill from Scotiabank.

Sorry if I missed it earlier, the line was cutting out a bit. But just on tariffs, I mean, are you seeing any issues in the supply chain or anticipating any major impacts in terms of cost or availability of consumables, things like that?

It doesn't seem to be an issue for us right now. Obviously, look, it's a very unstable world. I think Morne and our General Counsel did an amazing job getting our refinancing done, notwithstanding the ups and downs in the market and everything, I sleep much easier knowing that we have all that liquidity and no near-term principal repayments to weather any storms. I think that's more of what we're going to see. We haven't seen any like consumable or critical spare issues at this stage. I can't rule them out. It's probably more of just what I would call a general market uncertainty. That's been more of an issue for us. But as I say, I do sleep much easier having that refinanced.

There are no further questions at this time. I'll now hand back to Mr. McMullen for closing remarks.

Look, I appreciate everyone. I know it's a really busy reporting period in Australia. Look, I think clearly, if you asked me at the end of last quarter, which was our strongest quarter, what I would want, more copper is always the answer. Clearly, in Q1, more copper is the answer. I'll say the same thing at the end of Q2, just given the leverage we have to our fixed costs. But I think things that we've got a really good runway ahead of us now for 2025 and into '26. The major projects are all being executed. And look, the more that we get into this Merrin mine, the more we really think that thing has got the ability to really move the needle for shareholders and cap it on that. If you can see our growth CapEx for this year, in total, that Merrin is circa AUD 25 million for that kind of production, it's a no-brainer for us to do it. And so we're very excited about it, but obviously not taking our eye off the ball with our capital-bent project. You can see those development meters, and that really starting to pick up. So thanks, everyone, and we'll talk to you after Q2.

That concludes our conference for today. Thank you for participating. You may now disconnect.